WASHINGTON/ISLAMABAD: The World Bank Global Investment Competitiveness Report, 2017-18 has deemed Pakistan ripe for Foreign Direct Investment. The report analyzes a country on various factors that affect investment decisions.
Political stability and security, legal and regulatory environment, large domestic market size, good physical infrastructure and low cost of labour are among the major factors of analysis.
The World Bank Report praised the transparency on Federal Board of Investment website for taxpayers. The website displays all tax and customs incentives for investors. Pakistan is among the lower middle-income countries currently providing tax incentives.
The report reveals that political stability and security is the most critical element, especially in the developing countries. Legal and regulatory environment stands really close to stability as a second most critical element of an economy.
Large domestic market size, macroeconomic stability, favourable exchange rate, and available skilled labour are among the other important factors in the same order.
The report also identifies that the highest level of tax incentives are offered in the construction and building materials industry across all regions. IT and electronics closely follow construction when it comes to sector-specific and generally low taxation rate.
Machinery and equipment, air and spacecraft, apparel, textiles and footwear, automatic and other transport equipment, food and beverages, pharmaceutical, biotechnology and medical products, agriculture and fishing and tourism are among the important sectors on this list.
Key Findings of the Report
The key findings of the report based on interviews with 754 executives working at multinational corporations with stakes in developing countries reveal:
- Cost effective destinations are the top priority for export-oriented efficiency.
- Around 75% investors reinvest their profit money within the host country.
- Investors look for policies that are aligned with their business goals.
- Over 90% seek legal protection in the host country.
- Skilled local labour is preferred for hiring.
- Around 30% investors have closed down business in developing countries that have been avoided such as macroeconomic conditions.